- War-driven fuel shocks, diamond uncertainty and inflation cloud a fragile growth rebound for 2026
GAZETTE REPORTER
Botswana’s economic outlook for the rest of 2026 is being shaped by three major trends: a possible recovery in the diamond sector, ongoing reforms in the non-diamond economy under the Botswana Economic Transformation Plan (BETP), and the global energy shock linked to the ongoing US-Israel-Iran war.
According to the Econsult Economic Review First Quarter Jan-Mar 2026, compiled by economist Keith Jefferis, the third factor has now become the most influential.
“As of April 2026, it is the third trend that is dominant,” Jefferis said in the report, which was released recently.
He said the uncertainty created by the conflict has made forecasting Botswana’s economic performance increasingly difficult, particularly because there is no clear indication of how long the disruptions will continue.
The International Monetary Fund had forecast Botswana’s economy to grow by 4.7 percent in 2026, largely on expectations of stronger diamond production. But Jefferis said that projection was made before the outbreak of war in the Middle East and now appears ambitious.
Forecast Trimmed
Jefferis said weaker global economic conditions are likely to reduce demand for diamonds, putting pressure on household incomes and slowing consumption.
“Our projection is that nonetheless there will still be a recovery in GDP growth from -0.7 percent in 2025 to 3.7 percent in 2026,” he said.
That growth, he said, would be driven by a forecast 9 percent expansion in the diamond sector and 2 percent growth in the non-diamond private sector.
But the broader economy is expected to face significant pressure from rising inflation.
“As we noted above, inflation is set to rise to over 10 percent due to the increase in fuel prices,” Jefferis said.
Consumer Pressure
Higher fuel prices are expected to reduce real incomes for households, affecting sectors that rely heavily on consumer spending, including wholesale and retail trade as well as financial services.
Jefferis also warned that tourism could be affected by reduced international visitor numbers as higher aviation fuel prices increase the cost of air travel.
At the same time, domestic challenges continue to weigh on other sectors.
Real estate services and construction, he said, remain constrained by limited bank credit and high borrowing costs linked to continued government borrowing.
Agriculture Struggles
The agricultural sector has also come under pressure from domestic factors, particularly the spread of foot-and-mouth disease in Botswana’s cattle herd.
Jefferis said restrictions on cattle movement, slaughter and beef exports are expected to hurt the Botswana Meat Commission and cattle farmers.
Rising global fertilizer prices, driven by the war, are also expected to affect arable farming, though Jefferis said the impact will be felt more in the 2026/27 farming season.
In the short term, he noted that Southern Africa’s expected bumper maize harvest could help keep prices relatively low this year.